How Summit Materials performed in 2017

Summit Materials reports that its net revenue increased 17.7 percent last year to $1.75 billion, a mark the company attributes to acquisition-related contributions, increased organic sales volumes of aggregate, cement and asphalt, and increased organic selling prices on cement and ready-mixed concrete.

The company’s operating income also increased 42.8 percent to $220.9 million last year. The company’s adjusted earnings before interest, tax, depreciation and amortization (EBITDA) increased 17.4 percent year-over-year to $435.8 million.

“Our team delivered exceptional full-year results that exceeded the high end of our adjusted EBITDA guidance range,” says Tom Hill, CEO of Summit Materials. “We generated significant year-over-year growth in net revenue, operating income and net income last year, as supported by the completion of 14 materials-based acquisitions, together with sustained organic growth in our materials lines of business.”

Hill

Summit’s net revenue for aggregate increased 18.4 percent to $313.4 million in 2017. Aggregate adjusted cash gross profit margin increased to 65.3 percent last year, and organic aggregate sales volumes increased 3.4 percent due mainly to increased demand in Utah; Vancouver, British Columbia, Canada; Austin, Texas; northeast Texas; and markets in the Southeast.

“We have continued to experience broad-based demand for heavy materials across our business,” Hill says. “Organic sales volumes of aggregates increased 3.4 percent in 2017, versus a decline of 5.5 percent in 2016, driven by improvements in our West segment.”

Organic aggregate average selling prices declined 0.1 percent last year, mainly in Summit’s West segment. On a mix-adjusted basis, aggregate average selling prices increased 2.9 percent in 2017.

In Summit’s West segment, year-over-year organic improvements in sales volumes of aggregate and asphalt, together with acquisition-related EBITDA contributions, were partially offset by lower organic declines in average selling prices on aggregate. The company’s East segment, meanwhile, experienced year-over-year organic improvements in average selling prices on aggregate and asphalt and improved organic sales volumes of asphalt. Sales volumes decline in aggregate and ready-mixed concrete, though.

For the fourth quarter, Summit’s net revenue increased by 13.7 percent to $440.6 million. Again, the improvement is primarily attributable to acquisition-related contributions, increased organic sales volumes of aggregate and asphalt, and increased organic selling prices on cement, aggregate, ready-mixed concrete and asphalt.

“While the U.S. continues to enjoy one of the longest periods of economic expansion on record, our regional private markets show no indications of slowing,” Hill says. “Houston, Salt Lake City and Las Vegas – three of Summit’s largest housing markets – reported that full-year 2017 single-family home sales were, on average, 50 percent below the prior peak, while months of housing inventory was, on average, 75 percent below the prior peak, the combination of which we believe indicates room for additional growth.

“On the nonresidential side of its business, Summit continues to experience strong demand for commercial storage, fulfillment centers, healthcare facilities, educational institutions and transportation hubs, along with low-rise commercial infrastructure required to support residential communities,” Hill adds.

For additional details on the months ahead at Summit, click here.

Also, click here for details on the three most recently completed acquisitions at the company.